Nilambar Rath
Although apartment owners and associations in the state welcome the new legal instrument, many stakeholders are calling for ‘The Odisha Apartment (Ownership and Management) Bill 2023’ to cover the entire gamut of the real estate sector, like RERA.
The state government introduced the ‘The Odisha Apartment (Ownership and Management) Bill 2023’ in the recent assembly session, but it was withdrawn on the last day without any explanation. Apart from receiving cabinet approval the legal step was eagerly anticipated by thousands of real estate stakeholders and buyers.
While the Department of Housing and Urban Development’s bill was a step in the right direction, it appears to be limited to the subject of ‘apartments’, failing to meet the expectations of a broad range of stakeholders.
The Draft Regulation:
In the Statement of Objects and Reasons, the bill’s context, it explains the need for a new law, stating that it is more expedient to bring forth new legislation than to amend the existing act exhaustively. However, the bill appears to fall short of addressing the wider spectrum of real estate activities, according to experts and stakeholders.
The Odisha Apartment Bill 2023 was drafted in response to a slew of cases filed in the Odisha High Court challenging the Odisha Apartment Ownership (Amendment) Rules 2021. These rules were introduced by the state government after the Real Estate (Regulation and Development) Act 2016 (RERA) came into force.
The petitioners claimed that the state government’s regulations were not in line with the RERA Act, resulting in several contradictions.
The new legal initiative, presented in the assembly, only applies to regulating “apartments or buildings converted into apartments,” according to Chapter I. This limitation has caused many stakeholders to worry that other group housing projects, lands, or plotted schemes developed and sold by builders may go unaddressed under this Act.
The real estate sector is not limited to apartments, and many buyers have been struggling for over a decade to resolve issues related to ownership transfer, registration of buyers’ societies, and the handing over of common areas by developers. It is concerning that many housing projects in Bhubaneswar and other parts of the state lack occupancy certificates, which local development authorities have made mandatory.
Many developers do not submit completion certificates to local authorities after project completion or apply for occupancy certificates, resulting in thousands of buyers across the state becoming “illegal occupants” in their own land and house.
The 31-page draft of the Odisha Apartment (Ownership and Management) Bill 2023 refers to the RERA Act 2016 while linking various provisions of real estate operations. However, because the new legal framework will only apply to the business of apartments, and only makes provisions for the registration of flat owners’ associations (Association of Allotees) under this new Act, thousands of buyers and residents of other real estate projects may be left out from the legal umbrella.
Thus, residents of gated communities are calling for the state government to widen the scope of the law so that it can encompass the entire gamut of the real estate domain. If the new Act does not allow them to register their housing society under its purview, they will be forced to turn to Acts like the Societies Registration Act 1860, which does not have the necessary legal edge and provisions for smoothly governing a housing society or any real estate project.
The Real Estate (Regulation and Development) Act (RERA) covers the entire range of real estate projects, including plots, apartments, and other types of buildings. However, the new bill introduced by the state government is limited to apartments. As a result, experts believe that while this new legal instrument can protect consumers’ interests and resolve disputes related to apartments, consumers involved in other types of real estate projects may struggle to obtain their rights and benefits.
The Real Estate (Regulation and Development) Act 2016 builds the context in its ‘Statement of Objects and Reasons’ as “The real estate sector plays a catalytic role fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardization and lack of adequate consumer protection. Though the consume protection act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is not adequate to address all the concerns of the buyers and promotors in that sector. The lack of standardization has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasized in various forums.”
The above Act narrates the definition of ‘Allottee’ as: ‘“allottee” in relation to a real estate project means the person to whom a plat, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent’.
Registration of the Association of Allottees:
The new bill has aligned itself with RERA, binding the responsibility of forming the ‘association of allottees’ with the builder or developer. It explicitly defines the responsibilities of the builder, buyers, and owners’ association. A resident of an apartment in Cuttack, who is yet to have a registered housing society of their own, welcomes the bill, stating that upon completion of a project, the developer must obtain the occupancy certificate (OC) on time and hand over the common areas to the owners’ association as per the prescribed process.
However, some stakeholders have noticed a flaw in the provisions under the new bill. “Notwithstanding anything contained in any agreement, deed of transfer, or document of any nature, it shall be the joint responsibility of the promoter and allotees to form an association of allotees if either 50% of allotees or 7 allotees, whichever is lower, have been allotted with the apartments in a project,” explains the law while emphasizing the early formation of the ‘association of allottees.’
A real estate expert, wishing to remain anonymous, notes that while the RERA act requires the formation of the owners’ association under any real estate project after allotment of properties to at least 50% of allotees of the total number, the state government bill requires the same with a minimum of 7 allotees. Therefore, in large housing projects or apartments with 500 to 1000 flats, the association initiated by the developer with the initial ‘7 allottees’ may not be the right democratic mechanism to protect the rights and voices of the large number of buyers who will join phase-wise as they purchase the property.
The bill outlines the procedure for forming the Association of Allottees, stating that the application for the formation of the association of allotees shall be submitted within six months from the commencement of this act to the competent authority in such forms and manners as may be prescribed for registration of the association with the persons who have been allotted, sold, or otherwise transferred the apartment as members.
Any association of apartment owners registered under the previous law or the Societies Registration Act 1860 or any other law before the commencement of this act will be deemed to be the association of allotees for all intents and purposes of this act. Such associations of allotees must bring their bylaws in line with the provisions of the model bylaws prescribed under this act within six months from the date of such commencement.
Review of the Structural Safety of Apartments:
The advanced form of ‘The Odisha Apartment Ownership Act 1982’ and its subsequent amendments, the ‘Odisha Apartment (Ownership & Management) Bill 2023,’ has provisions for reviewing the structure of apartment buildings that are over 30 years old. This will help regulate the safety of buildings and ensure residents’ safety.
The bill outlines the legal procedures for dealing with any building deemed unsafe for occupation and has provisions for protecting the rights of each property’s bona fide owner under the project. It also has provisions for insurance coverage to protect houses from fire and natural disasters, with the premium amount booked from the common expenses of the ‘association of allottees.’
Responsibility and Obligations of Promoters:
Chapter IV of the ‘Odisha Apartment (Ownership and Management) Bill 2023’, which deals with the “Responsibility and Obligations of Promoters and Apartment Owners,” clearly states that the builder is required to hand over all relevant documents to the “association of allottees.”
The Bill mandates the builder to provide all original documents related to the project, including but not limited to title documents, lease certificates (in the case of lease property), approved plans, as-built plans, statutory compliance certificates, insurance documents, encumbrance documents, diagrams of wiring and plumbing, equipment purchase documents, annual maintenance charge documents, and any other relevant documents related to the project to the association of allottees within thirty days of the issue of the Occupancy Certificate.
The association of owners must acknowledge receipt of the documents and the copy of the same to the submitted before the competent authority by the developer. Additionally, as per the Bill, the promoter is required to “transfer all unpaid amounts collected from the allottees, security deposits, corpus fund, advances collected, if any, along with interest thereon, to the association of allottees within thirty days of the issue of the occupancy certificate.”
The Bill also stresses the importance of the quality of the building and associated services offered by the promoter by requiring that “the promoter shall rectify any structural defects or any other defects in workmanship, quality or provision of services or any other obligations without further charge, within a period of five years from the date of handing over possession to the allottee.”
The ‘Odisha Apartment (Ownership and Management) Bill 2023′ is an essential legal instrument for protecting consumers’ interests in the ‘Apartment’ segment, along with the provisions under the ‘Real Estate (Regulation and Development) Act 2016.’ However, with necessary modifications to encompass the entire real estate sector, this Bill could further become a powerful and dynamic legal tool in the field.
(Author is a media veteran turned entrepreneur. Views are personal)